Wonder if somebody heard of the gentoo "catalyst" project:
creating a gentoo-linux from sources for burning to cd
http://www.gentoo.org/proj/en/releng/catalyst/
well, I know, we dont have 650MB on our boxes, but they have already included squashFS and are somehow MIPS-compatible

According to the HP they are not able to do cross-compiling at the moment, but who knows what will be in the future...

interesting would also be the portage-tree (a list of stable/dev packages)
http://www.gentoo.org/main/en/about.xml

majx